Monday, March 30, 2009

NYC EDC's Pinsky: Atlantic Yards "not over" but "missed the market;" is streamlining environmental review the answer?

On Friday, New York City Economic Development Corporation (NYC EDC) President Seth Pinsky was the luncheon speaker at Getting It Right: Government’s Role in Housing and Economic Development, a symposium held at Brooklyn Law School.

In his address, he talked about Yankee Stadium, CitiField, the World Trade Center site, Hudson Yards, Coney Island, Willets Point, and Hunters Point South, among other major projects.

Unmentioned was Atlantic Yards, Brooklyn's most controversial project, so, during the Q&A, I brought it up in a nonconfrontational way (despite the temptation to ask whether NYC EDC would ever tell me how much the project costs).

"Are there any lessons to be learned from Atlantic Yards?" I asked.

Tricky environment

"Yes. The first is that it’s not over ‘til it’s over," Pinsky replied, to some chuckles. "We continue to work with Forest City and think that there are steps that can be taken that can allow that project to move forward. We’re hoping that that we can work with them to get the financing, to get at least the first phase of the project under way before the end of the year, but, no doubt, it’s a very tricky environment in which to do a major financing, so we’re hopeful, but nothing is real until it’s real. With respect to your question--"

"In terms of the other projects you’re doing," I followed up.

Building over a railyard

"The issue with Atlantic Yards is that you’re building over an active railyard, and there’s a reason why active railyards around the city have gone undeveloped for many, many years even when they’re surrounded by neighborhoods that have very valuable land," he said.

Which is an argument for having such a site bid out, as with Hudson Yards.

"And the reason is that it’s extremely expensive and it’s extremely complicated," he continued. "And the only way you can really pay for the expense is with a lot of density on top. And so, the economic realities sometimes come up against the political realities."

That's true, but it raises a question as to whether an anointed developer who designates the density is best way to address the political realities, or whether a more democratic process--a public rezoning--could have done so.

Missing the market

"I think in the case of Atlantic Yards, notwithstanding a lot of opposition--there’s no question that there is a lot of opposition--there’s also a lot of people who are in favor of the project. But because the opposition was as vocal as it was, they were able to tie the project up and, essentially, make it such that, at least for now, Forest City has missed the market," he said.

Yes, Atlantic Yards was announced and approved during a time of economic optimism. But should city and state planners have accepted the developer's optimistic and unrealistic (even then) assumptions, such as a ten-year buildout, or should they have developed alternative scenarios?

Remember, the Port Authority of NY/NJ recently presented both a target date and a “probabilistic” date for the World Trade Center site.

Streamlining city processes

"And so one of the things that we’re working on doing, going forward, is to try to make city processes more streamlined," Pinsky continued.

That's a reasonable point--that in some cases, as the Manhattan Institute has pointed out, the environmental review could revamped. However, with Atlantic Yards, the lengthy environmental review was performed by the Empire State Development Corporation (ESDC), not the city, and the avoidance of the city's land use review process meant that no local elected officials had a voice--a spur to criticism and opposition. So the city process was irrelevant.

"On the one hand, you don’t want to make it so easy for people to go through city processes that they’re meaningless, or that they don’t achieve their underlying aim, for example, with environmental impact statements," Pinsky continued. "But, when you get to a point where--and I’ll use an environmental impact statements as an example, when you get to a point where environmental impact statements are 8000 pages long, they’re just invitiations to litigation, and they’re not informing anyone about anything on these projects, because nobody’s going to read an 8000-page EIS except for a lawyer"--some in the crowd laughed--"I guess there are a lot here."

The lengthy EIS for Atlantic Yards also could have been seen as a protection against litigation. And some of the answers were informative, in their way, such as the state's contention that the Atlantic Yards site would be stagnant without this project.

"I think that figuring out how to strike that balance between, on the one hand, not wanting developers to run roughshod over city processes and over communities, but on the other hand, not making it so difficult to get projects done that you’re inevitably going to miss a market if you start during that market--that’s what we’re trying to figure out," he said.

Contrast with Willets Point

I followed up once more: "Willets Point is a contrast, because no developer has been selected yet. I was wondering if that’s in your mind, as well."

"There are projects we’re doing around the city that follow the Willets Point model. There are projects that we’re doing that will continue to follow on the Atlantic Yards model," he responded.

Perhaps, but Crain's has reported that, in a project like Willets Point that involves eminent domain, the city did not want to be accused of selecting one developer at the start and thus making itself vulnerable to a lawsuit.

Whose risk capital?

Pinsky continued: "The advantage that you have when there’s a developer there is that there’s someone who can pay for design and can do the analysis and figure out what’s financially feasible from a private perspective. When you don’t have the developer, the city’s paying for the design and we’re doing the analysis."

"And I think we’re doing a pretty good job of it, but we’re not putting our risk capital into the project, so I think there are advantages and disadvantages to both," he said. "I don’t think that, as a result of what has or hasn’t happened at Atlantic Yards, that we’re going to change one way or another on that issue."

Yes, Forest City and its partners have invested $250 million into the project. But the city and state have committed $305 million in direct subsidies, along with tax breaks and other benefits worth hundreds of millions of dollars (or more, some contend).

So the developer and the government are partners, with both having invested enough to not want to back up. That leaves the developer in a position to ask for more concessions, via indirect subsidies.

Community input

Later, when asked about involving communities in development, Pinsky responded, "We... have increasingly tried to bring the community into the discussions from the very early stage when we look at neighborhoods. I think we’ve always done a pretty good job at it, but we’ve learned some lessons over the course of the last few years and gotten much better at it."

He went on to cite the multiple phases of ULURP, the city's Uniform Land Use Review Procedure, which as noted above, did not apply to Atlantic Yards.

He sounded a little like former Deputy Mayor for Economic Development Dan Doctoroff, who also said the city was getting better at it.

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